New mortgage rules may price first-time buyers out of market, CREA warns

The Canadian Press

Bill Morneau says Ottawa has no further plans for housing cooling measures

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OTTAWA - The Canadian Real Estate Association says the number of home sales edged higher in September compared with August, ending a streak of month-over-month decreases.

Sales through the association's Multiple Listing Service were up 0.8 per cent nationally last month compared with August.

Sales were up in the Toronto region were up, while they continued to fall in and around British Columbia's Lower Mainland region, which includes Vancouver.

Compared with a year ago, the number of home sales was up 4.2 per cent from September 2015.

The national average price for a home sold in September was up 9.5 per cent compared with a year ago at $474,590.

Excluding the expensive Greater Vancouver and Greater Toronto regions, the average price was $358,884 last month.

CREA said Finance Minister Bill Morneau's new regulatory changes affecting mortgage lending has added to uncertainty among buyers and sellers in the housing market.

"For first-time home buyers, the stress test for those who need mortgage default insurance will cause them to rethink how much home they can afford to buy," CREA President Cliff Iverson said in a release.

The association also said the stricter mortgage stress test rules that take effect on Oct. 17 may price out first-time homebuyers, particularly in housing markets with limited inventory of affordable single-family homes.

"First-time home buyers support a cascade of other homes changing hands, making them the linchpin of the housing market," Gregory Klump, CREA's chief economist said in a release.

"The federal government will no doubt want to monitor the effect of new regulations on the many varied housing markets across Canada and on the economy, particularly given the uncertain outlook for other private sector engines of economic growth."